Law offcials, Bitcoin groups form alliance

The Obama administration is joining with private companies in a partnership aimed at training enforcement officials about the virtual currency Bitcoin and fighting crime arising from its use.

The goals of the partnership, called the Blockchain Alliance, include educating investigators on the ins and outs of how the technology works and enhancing the reputation of a digital currency that’s been associated with high-profile crime even as it has slowly gained mainstream acceptance and legitimacy.

The alliance includes the Departments of Justice and Homeland Security and representatives of private companies such as BitFury, BitPay and CoinBase that are involved in virtual currency.

Supporters see Bitcoin, a decentralized form of money that offers users a degree of privacy for their transactions, as a fast and easy payment system that is gaining legitimacy among regulators and businesses.

But Bitcoin’s reputation has suffered as criminals have exploited it for Ponzi schemes and as the primary currency for Silk Road, the Internet drug bazaar whose founder was sentenced to life in prison this year.

“Far too many people think of Bitcoin as the currency of criminals,” said Jason Weinstein, the alliance’s director and a former Justice Department deputy assistant attorney general.

Industry participation is intended to signal a commitment to helping law enforcement weed out criminal activity associated with the currency.

“The more law enforcement understands how this technology works, the more they can understand what they can ask for, how they can ask for it,” said Jerry Brito, executive director of Coin Center, a Bitcoin advocacy group and participant in the alliance.